Dubai: Union National Bank (UNB) on Sunday reported that second-quarter net profit had declined 18 per cent to Dh415.9 million on the back of rising costs and falling income.

The figures mark the second consecutive quarterly decline in profits after the Abu Dhabi lender’s profit fell 6 per cent year-on-year in the first quarter. They also bring net profit for the first half of 2018 to Dh841.5 million, down 12 per cent year-on-year from the Dh958 million recorded in the same half of 2017.

The decline in profit came as impairment charges jumped 68 per cent in the second quarter to Dh151 million and were 20 per cent higher year-on-year in the first half of 2018 at Dh310 million.

Non-interest income also fell 35 per cent year-on-year in the second quarter to Dh174 million, and fell 26 per cent year-on-year in the first half. UNB said this was “mainly due to reduction in fees and commission income, and lower gain on dealing in foreign currencies and derivatives.”

“Whilst maintaining strong balance sheet, sound liquidity position, and solid capital rations, UNB continues to maintain its strategy to cautiously pursue loan growth while managing the downside risks,” said Mohammad Nasr Abdeen, chief executive officer of UNB.

Earnings per share dipped to Dh0.29 at the end of the first half of 2018 from Dh0.33 at the same time last year.

In its management report, UNB said it continued to be “selective to book new business amid scheduled repayments of loan facilities.”

“The group is well placed to take advantage of growth opportunities through our well established franchise, product offerings, and strong balance sheet as the region, and more specifically, the UAE, continue to innovate and diversify for a sustainable future,” Abdeen said in the report.

UNB’s total net interest and Islamic financing income rose 9 per cent in the second quarter amid a higher interest rate environment as the central bank hikes rates.

On the balance sheet, loans and advances fell 7 per cent year-on-year to reach Dh67.3 billion at the end of June 2018, as customer deposits also dipped by 4 per cent year-on-year to Dh70.3 billion.

UNB said that its “selective approach” along with “routine repayments and impact of IFRS 9 transition adjustment” led to loans being lower in the first half of the year.

“Various business deals are in the pipeline and some of these are expected to be completed in the second half of this year,” the management report said.